Hilla Sferruzza of Meritage Homes: “Understand how money grows and then, invest ”

Understand how money grows and then, invest — Not all savings are equal. While money markets are safe, if you are younger, your risk tolerance likely trends higher, and, under the guidance of a financial advisor, you should understand the risk and growth offsets available in various investments and slightly push yourself outside of your comfort zone. […]

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Understand how money grows and then, invest — Not all savings are equal. While money markets are safe, if you are younger, your risk tolerance likely trends higher, and, under the guidance of a financial advisor, you should understand the risk and growth offsets available in various investments and slightly push yourself outside of your comfort zone. Older you will thank you for it.

As a part of my series about strong female finance leaders, I had the pleasure of interviewing Hilla Sferruzza.

Hilla Sferruzza, MBA, CPA has been the Chief Financial Officer, Executive VP for Meritage Homes Corporation (NYSE:MTH) since 2016 and its Chief Accounting Officer, Senior Vice President, Corporate Controller since 2008. Prior to Meritage, Ms. Sferruzza served in various management roles at Starwood Hotels and Resorts Worldwide, Inc. (NYSE:HOT), which was subsequently acquired by Marriott International, and as a public auditor for KPMG.

Ms. Sferruzza has spent over two decades serving large public companies across the greater Phoenix area. With experience ranging from hospitality to financial institutions and culminating in her current role in real estate and construction, Hilla is familiar with a wide breadth of public company operational best practices. She is a subject matter expert on residential construction and land acquisition, debt and equity capital transactions, M&A and divesture structures, financial modeling, budgeting and forecasting, and process improvement opportunities. She also oversees infrastructure, application and development information technology.

As a member of the executive team, Ms. Sferruzza aided MTH in navigating through the housing market collapse and subsequent recovery, with a focus on balance sheet liquidity, financial solvency, tax strategy and mortgage structures. Subsequent to the recession, she assisted in securing a new revolving credit facility and over 2B dollars of debt and equity capital market financings and several acquisitions.

Ms. Sferruzza is a Certified Public Accountant in the state of Arizona and is a member of the American Institute of CPA’s, Arizona Society of CPA’s, the National Association of Professional Women and Financial Executive International and was voted Arizona Businesswoman of the Year — Real Estate in 2011 and CFO of the Year (FEI’s Arizona Chapter) in 2019. She earned her Executive Masters of Business Administration (Summa Cum Laude) from Washington State University and her Bachelor’s of Science in Business Administration with an Accounting and Journalism emphasis (Summa Cum Laude) from the University of Arizona.

Hilla is active with several community service organizations and has served as a board member for non-for-profit organizations and foundations. She has coached and administrated youth sports and is involved with local children’s charities. Hilla resides in Phoenix, Arizona with her husband, Vince, and her two children.

Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the finance field?

Thank you for inviting me to participate! My path to finance was a bit divergent. I was working on my journalism and mathematics degrees, and was short an elective. Like a typical college student, I procrastinated and by the time I signed up for summer school, only Accounting 101 was still available for registration. I enrolled with low expectations, but after the first class, I fell in love with the logic inherent in accounting and finance, and switched majors my senior year. I find that my current role as CFO combines my past loves of math and persuasive writing with the business acumen I gained getting my finance undergrad, and later my MBA.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?

The predecessor CFO at Meritage Homes, who was my mentor, started bringing me along to investor meetings a couple years before his retirement to prepare me for my eventual ascension into his position. Although I’m typically a fairly confident person, I was terrified someone would ask me a question and I would freeze up and not know the response. To avoid embarrassing myself and my boss, I decided I would just sit quietly in the corner and observe, but not speak. Even still, I spent the whole night in the hotel room beforehand reviewing reems of paper and spreadsheets, trying to memorize everything I could.

The next morning, we started our meeting bright and early. To my surprise, halfway through our first of 30 meetings, my boss responded to a question with “I don’t know, but let me get back to you on that.” That was probably one of the most impactful and important lessons of my career. As much as you prepare, you still may not know everything, but, that’s okay! The relief from the need to be perfect has actually allowed me to be more productive in my workday and focus on the critical items, only shifting focus to the minutia when required.

Are you working on any exciting new projects now? How do you think that will help people?

My battle cry for 2020, and hopefully beyond, is “Leveraging Technology”, as the IT team is part of my corporate oversight group. We are reviewing everything, from automating internal processes to allow our teams to focus on analysis versus manual processes, to enhancing the experience of working with us for all of our partners, from customers, to trades to investors. We have only explored the tip of the iceberg here, and I hope it will increase satisfaction for our employees by allowing them to do what they do best and make us the partner of choice by removing friction and obstacles for all our external and internal interactions.

What do you think makes your company stand out? Can you share a story?

Although I truly believe in our old company tagline, that at Meritage Homes, we build the American dream, I think our differentiator in a crowded market place is our commitment to building environmentally-forward homes that are respectful of our environment, while providing a healthier home for our customers with lower utility bills. While I have dozens of happy customer stories over the years, the safer air quality in our homes has become even more important in today’s pandemic-influenced world. Hearing from our customers that they feel confident with moving their young children or elderly parents into their new Meritage Homes makes all the hard work worth it!

Ok. Thank you for all that. Let’s now jump to the main core of our interview. Wall Street and Finance used to be an “all white boys club”. This has changed a lot recently. In your opinion, what caused this change?

Maybe I’m a bit too Pollyanna and see the world how I want it to be versus how it actually is, but I feel like some of the prior stereotypes for how women and minorities should “behave” have been upended recently. With family roles becoming more fluid between males and females, and minorities and women feeling more empowered to reach for the brass ring, I believe the successful “non-white boys” that have always been part of the work force are finally starting to ask for the promotions and lateral movements they deserve. As the demographics for mid and top-level management start to change, these new leaders must become advocates for promotions and opportunities for a more diverse team.

Of course, despite the progress, we still have a lot more work to do to achieve parity. According to this report in CNBC, less than 17 percent of senior positions in investment banks are held by women. In your opinion or experience, what 3 things can be done by a)individuals b)companies and/or c) society to support this movement going forward?

This figure is clearly disappointing, but with the announcement of the succession of Jane Fraser to the top job at CEO at Citibank just a few weeks ago, hopefully the tide is changing. In order to continue to shift this percentage to something more representative of the actual work force, I believe we can take the following actions:

Awareness: The first step is to acknowledge that your company may not be excelling at promoting diversity, whether that’s gender, race or anything else. It’s sometimes tough to introspectively review your culture, but no change can occur without awareness, which must happen first. As we all know, insanity is the doing the same thing, but expecting different results, so lead the discussion of what is contributing to the non-ideal state.

Hiring Practices: Next, in order to hire a different employee base, we must attract a different employee base. If you use internal or external recruiters, push them to find more diverse candidates to present, instead of recycling the same resumes you have seen before. Not every diverse candidate will start at the top, and that’s okay. You have to fill the bench and then promote from within. Some organizations have even required at least one diverse candidate to interview for each role before it can be filled, further advancing this initiative.

Weighting: Historically, when I interviewed candidates for open roles, I would focus on their technical competency and culture fit as the primary determinants of qualification. Over the last several years, I’ve shifted my thinking to include diversity as a criteria with appropriate weighting in my final decision. I believe a more diverse team leads to better decision making and inclusion, and also, allows us to better align with our customers’ diverse profiles, which yields better operational results. It’s a win-win, which rarely happens in the corporate world.

Let’s now turn to a slightly new topic. According to this report in Fortune, nearly two-thirds of Americans can’t pass a basic test of financial literacy. In your opinion or experience what is the cause of these unfortunate numbers? If you had the power to make a change, what 3 things would you recommend to improve these numbers?

While this is a completely foreign concept to me as a “recovering” math major, but as a mom of two high schoolers, I can confirm that most teenagers are intimidated by math. They find it overwhelming and follow the “ostrich” philosophy that if they bury their head in the sand, it will likely pass. Unfortunately, I think this fear has passed on to financial literacy and basic economics. If I had the power to impact the financial literacy of Americans, I would recommend the following:

1. Required classes: While all of us can probably quote a funny meme about how we wish we learned how to balance a check book versus solving algebraic equations in high school, this is, unfortunately, the truth. We need to start educating our youth about financial literacy as a required skill set to high school graduation. Everything from balancing that check book, to understanding the consequences of compounding interest on credit card debt, to the long-term benefits of equity building from home ownership to how the stock market functions.

2. Required savings: At Meritage Homes, we default all employees into our 401k plan to assist in their long-term savings goals. While they can certainly elect to opt out, we find the act of asking about the plan helps them gain an understanding of the tax-free growth available to them, and encourages them to learn a bit about financial literacy while helping them save for their future.

3. Financial Advisors: Financial advisors are a wealth of knowledge (no pun intended!) and their services are typically free. To me, these are kindred spirits that truly enjoy educating their customers about financial literacy. We need to increase awareness of the opportunity to work with financial advisors as, like math, most people are intimidated to approach them, or falsely believe you need to be “uber wealthy” to require their services. In reality, financial advisors can create a non-threatening learning environment while also providing with a service that can hopefully assist Americans in reaching their long-term financial goals.

You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?

As I do have two almost young adult children, this question hits close to home. So I’m happy to share the advice I give my own kids. While I would argue these recommendations are actually intuitive, they don’t seem to be occurring, so let’s cover them anyway:

Prepare a budget — First and foremost, prepare a budget. This is probably a combination of financial expert/mom advice, but if you don’t have a plan, you’ll never reach anything. If you want to have money to invest at the end of the day, buying a Starbucks coffee seven days a week may not be in your budget the first year out of college. Know and document all of your expenses. You will be shocked by what you learn.

Open a savings account. Fund it — Commit to putting away a fixed amount of money into savings every paycheck. This will become second nature and you’ll never miss it. With every raise and promotion, fund it a bit more.

Set goals –Know what you’re working toward, to motivate you. While some savings should be long-term, also set goals to fund upcoming travel, a large required purchase like a car or an appliance, or just a splurge because you’ve earned it. You will be excited to track the progress and feel satisfaction when the goal is reached.

Understand how money grows and then, invest — Not all savings are equal. While money markets are safe, if you are younger, your risk tolerance likely trends higher, and, under the guidance of a financial advisor, you should understand the risk and growth offsets available in various investments and slightly push yourself outside of your comfort zone. Older you will thank you for it.

OK to spend the rest — Once you’re allocated funds to invest both short and learn term, don’t feel guilty about spending the rest. You work hard (hopefully), so if you worked late and you want to order dinner out, don’t fret about not being able to retire in 45 years because of it. That’s the beauty of having a plan. Which brings us back to #1, as this is a constantly evolving, circular process that needs to be reviewed and updated frequently.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Professionally, while my predecessor and mentor can be given most of the credit for training and preparing me for my current role. However, as I reflect on this question, I realize that the person that I should probably attribute my success to is actually one of my direct reports. This incredible employee has been part of my team for over a decade and has allowed me to achieve my success by anticipating everything I need and removing all noise and distractions. I have had the pleasure of sharing my successes with her, as my promotions resulted in promotions for her as well.

Over the years, we have certainly had our share of workplace “adventures”, but one recent situation that comes to mind is the migration of our Accounts Payable system from an extremely manual process that hasn’t changed in over two decades, to an RPA that is completely automated. I anticipated needing to dedicate significant amounts of time to this initiative and was concerned I would end up having to short-change other equally important projects. This teammate took over and handled this process start to finish, involving me with only the necessary, and shielding me from the day-to-date wherever possible. While I always thought it was my role to remove hurdles for my team, I am learning that they are doing the same for me daily.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

My team knows I’m famous for repeating certain phrases and my favorite is probably “the only thing I’m married to is my husband.” While it’s a little tongue-in-cheek, I always remind my team, the organization at-large, and myself at a personal level, that we shouldn’t be so committed to something that we are unwilling to consider a change or improvement. Keeping an open mind is what keeps us innovative and while we should never jump into a new initiative without doing sufficient due diligence, we shouldn’t be so set in our ways that we are unwilling to accept change.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂

So, I’m going to really reach way out there on this one, but if the goal is to impact the greatest number of people, then the answer is easy for me. I would love to encourage a movement to re-engage a passion for reading. In today’s insta-everything overstimulated world, the joy of losing oneself in a full-length novel, or learning something new through a gripping non-fiction book, is seemingly a disappearing activity. I cherish the quiet times I get to unwind with a great book and slow down the pace for a bit. And continuously learning and maybe creating a shared connection with a new friend? Well, those are just icing on the cake. And with so many e-books available at no charge, most Americans, young and old, should be able to participate.

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